A bit like hedge-funds, betting syndicates are generally private operations who don’t share a lot of information about themselves with the outside world.

This information vacuum is often filled with nonsense, misconceptions and conspiracy theories. So here’s a handy quick myth-busting guide about…..

BETTING SYNDICATES

… always know who is going to win

We don’t! Wish we did, but we don’t. The truth is that almost half the bets we place lose. A betting syndicate makes a small profit margin on a large number of bets. In theory every bet will give a positive return, but in practice results are always subject to randomness – stuff happens in every match that makes it unpredictable. We just try to make the best sense we can of the randomness, to make sure we win slightly more often than we lose.

… are a shady group of criminals, making money illegally

We’re really not! A betting syndicate is a business, much like many others. It has lots of parallels to organisations that operate in the financial markets, like hedge funds. Just like hedge funds, syndicates generate a profit by making value investments. Our investments happen to be bets on sports events; in our case, football matches. It’s all totally legitimate, legal and above board. Syndicates tend to keep a low profile, and don’t talk a lot publicly about their business because they are normally privately funded, so aren’t looking for external investors, and because they don’t want to give away any secrets to the opposition, including other syndicates. The people who work for syndicates are generally rather normal, professional, hard-working individuals. Not hardened criminals fixing matches and scamming the bookies, no matter what you might read in the papers!

…. use tipsters and experts to tell them who to bet on

Be wary of anybody describing themselves as an ‘expert’. Most tipsters offering to sell you tips don’t really know how to identify value bets, despite often talking a good game. And knowing a lot about a sport does not mean that you will be good at betting on it. Success at betting is defined by the prices you bet at, not what you bet on. The outcome of any event/match is governed by randomness, with hundreds/thousands of different people and events each having an influence on what actually happens on the field. So for professional investors making predictions is useless. We deal in probabilities, not predictions. A great team will beat a rubbish team more often than not. But what we want to know is, how likely is it that they will win today? What is the probability? We do all of our own research, analysis, modelling and betting. The opinion of some ex-professional footballer who says he thinks ‘X will happen’ is not of any worth to us.

…. break the law by cheating with court-siding

Court-siding is the practice of attending a live sporting event, reporting on the latest scores in real time. Syndicates who bet on tennis and cricket use court-siders a lot. It is not illegal! All the court-sider is doing is beating by a few seconds the information that the syndicate would get otherwise by watching the TV, or following the match online. In sports like tennis and cricket this can make a difference to the efficiency with which the syndicate bets. Current score data is fed into a computer model which generates prices (probabilities) for the match outcome. Getting the score data quicker just means the syndicate’s prices are a few seconds ahead, giving them a small competitive advantage. Court-siding (or ‘pitch-siding’) isn’t a big thing in football, because bookmakers will suspend markets when there is a goal or a red card. In higher scoring sports like tennis and cricket the markets stay open throughout the match. So we don’t use court-siding for updating football scores, though we do have some methods for getting better quality data from matches than just watching TV pictures. But syndicates who use court-siding aren’t doing anything ‘dodgy’, and they certainly aren’t breaking any laws!

…. do match fixing

Tabloid newspapers love a match-fixing story, and it certainly goes on occasionally. There are probably a few thousand sports betting syndicates dotted around the globe. Only roughly 0.01% of them would ever entertain the idea of doing something illegal like match fixing in order to get an edge. For us it would be a crazy thing to even consider. We have a good solid profitable business, where our success is based on gaining a statistical advantage though being smart and working hard. We don’t need to cheat to win.

…. bet on spread bets, and bet on Bookings and Goalscorers

There are only two bookmaker football markets where it is possible to bet in large enough stake sizes to sustain a syndicate. They are; Asian Handicap and Over/Under. Football syndicates might dabble in other bookie markets, and use betting exchanges, but these two markets are the mainstay of a football betting syndicate operation. Syndicates need liquidity (i.e. the opportunity to bet decent amounts) in markets in order to operate. The market for betting Bookings (e.g. which team will receive more cards) and Goalscorers (e.g. First Goalscorer) are too small for most syndicates to take an interest in. 99% of our bets are currently on Asian Handicap or Over/Under.

…. rely on computer models to tell them what to bet on

Most syndicates, including ours, now use computer models to help get an edge. But they are just one part of the process of identifying value bets. A computer model can’t know that a team’s star striker has pulled his hamstring and won’t play, or that the weather and pitch are due to be atrocious. When a team makes a new signing, or changes its manager then its characteristics and ability will change. Humans are needed to quantify these influences, though often these will be done as numerical adjustments that are fed into a computer model. Trading a football match in-running generally involves a combination of mathematical modelling but also subjective input by an experienced trader who can read the balance of a match.

A version of this article originally appeared on Odds-Invest.com. I write betting related articles for them in addition to my day job there.